Market Commentary 27/10/16

EUR/USD – Moving Towards Yesterday’s Highs

EUR/USD is currently in the process of moving towards yesterdays high, if this high get broken we could see further up-movement take place.

aviary-photo_131220534279467320The market almost returned to the demand zone I marked in yesterday’s post, but I was not expecting the market to respect this zone anyway so I wouldn’t have traded it even if the market did end up hitting it. With the move higher we have seen today there is a high probability we’ll see the market will break through yesterday’s high either tonight or tomorrow. If this high gets broken, it would be a strong signal the market is going to continue moving into the daily supply zone seen above.

For now monitor the market to see if yesterday’s high ends up being broken by a move higher. If it does get broken, watch for a reversal to begin around the supply zone seen inside the daily supply zone, as this is the last point in the market where the banks could have got a large number of their sell trades placed. If the market fails to break the high, expect the market to fall through the demand zone and back into the daily buy zone where this up-move originated from.

 

USD/JPY – Supply Zone Broken

The supply zone which formed from the drop that took place on Tuesday has been broken today by a move higher which began early this morning.

aviary-photo_131220538944270299The fact the supply zone has been broken, means that now it’s likely the market is going to continue moving higher into the daily supply zone found at the 106.000 level. I wouldn’t be as sure to say that a reversal back to the downside is now definitely not going to take place due to the supply zone being broken, as the move up through the zone could simply have occurred because the banks didn’t have enough buy orders to get all of their sell trades placed. We could still end up seeing the market fall from where it is now all the way back to the buy zone closest to the current market price, if that happens the chances of the market moving up to the daily supply zone are low as it would be a sign the banks are getting more sell trades placed into the market.

Tonight wait to see if the market continue it’s climb higher or if it turns and begins moving lower. My personal opinion is that we’re going to see it continue moving higher, if we do wait for more market structure to form because at the moment there isn’t any levels we can use to look for entries long. If the market drops from where it is now and begins moving towards the buy zone closest to the current market price, it’s likely the market is going to continue moving down to the buy zone seen at the bottom of the image. The drop from where the market is now might end up creating a supply zone we can use to get an entry short into the down-move to the buy zone at the bottom of the chart, so be on the lookout for bearish engulfs inside the zone if that ends up taking place.

 

AUD/USD – Continued Decline Breaks Demand Zone

The demand zone which I talked about in yesterday’s post was broken this morning and now the market is reacting to the buy zone which caused the previous up-move to take place.

aviary-photo_131220559169391684With the demand zone broken I think it’s likely we are going to see the market continue to fall after the buy zone has caused a small retracement to take place. At the moment I’m not sure where this retracement is going to end but I would watch for it to terminate somewhere between the 76.221 level and the 0.76521 level. I think the best idea is to just let the price action give us a clue as to when the retracement might be ending in the form of a large bearish engulfing candle appearing or a sharp move lower taking place. Once the retracement has ended expect the market to fall through the buy zone and down towards the daily demand zone seen around the 0.75000 level.

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